‘Fragile’ recovery in the European residential sector according to RICS

While housing markets experienced rising prices in Belgium, France, Germany and the Nordic countries during 2010, other markets were still facing problems. Ireland, Hungary and Cyprus experienced significant falls through the year and in the UK, Netherlands, Poland and Italy prices were slightly down. In Spain, Greece and Portugal last year’s falls were quite moderate despite their economic problems, and the Baltic States are showing a progressive recovery.

According to Mr. Pavlos Loizou MRICS, member of RICS Board Cyprus: “The housing market in Cyprus continued to slow down in 2010. The new RICS Cyprus Index reported that apartment prices were 10.8% down in the first nine months of 2010 and house prices down 7, 4%. Also transactions declined sharply, especially if we consider that foreign buyers’ presence dropped by 80% from the peak and there is only slight interest in property in secondary areas. There is little prospect of a significant pick-up in the market in 2011.”

Though most European markets are stepping out of the crisis, the research reveals that the future of the European housing market is still uncertain and full recovery will depend on several different factors. Unlike previous housing market upturns, this time the recovery is led by price increases, while other market indicators such as housebuilding supply and sales are still low across Europe, with some exceptions. In addition many countries continue to face important mortgage constraints. While interest rates remained low during 2010, markets are likely to be very sensitive to any interest rate increases.

The report's author, Professor Michael Ball, said: "Full recovery will not occur until housing markets are fully functioning again: with plentiful mortgage finance, revived housebuilding and extensive market turnover throughout all sectors. However, the residential sector in Europe is far from following the long term standstill that the US housing market is experiencing.”